If you currently own and run a business solo or corporately, you are constantly taking recurring payments day in and day out. Today, businesses are mainly processing only credit and debit cards, which means most businesses need payment service providers to help make it a more quick and easy process. However, there is a new option available that many businesses haven’t taken notice of. It is completely up to you to choose which payment method is the right fit for your business and what is most important to you.
This isn’t the best practice, but we simply need to tell you why it’s not before reading any further. Choosing the do it yourself route may save you money, but is it really worth the hassle? We mean truly setting everything up yourself starting from scratch (like most start-up businesses). Processing payments yourself means taking way more time to process and having a much less ease of access to your payments. You are looking at three to four weeks with credits cards, and four to nine months with direct debit for the entire application and setting up process! So let’s steer away from this option and review the next two best practices.
A full-service payment provider, such as PayPal or Adyen, usually runs through a management software such as Bottomline, and Fundtech. The setup process to collect payments through a payment service provider can be a surprisingly quick process. However, depending on the provider of your choice the set-up and payment process varies.
As said to be the way to go for most businesses, a payment processor is a combined merchant account and a payment gateway. Examples of these payment processors include Stripe and Braintree. You are looking at instant payment services when you choose a payment processor service.
Setting up a payment processor is not easy, especially without prior knowledge of what works best for you. As credit cards and direct debit are the most commonly accepted forms of payment, the setting-up process for these types of recurring payments varies. If you choose to do it yourself, you’re looking at 3 to 4 weeks for credit cards and 4 to 9 months for direct debit. Ouch! The “do it yourself” route means managing everything by yourself through a bank, thus why it takes much longer. Choosing a payment provider, your set-up process will vary depending on the provider you choose. For example, PayPal can take a few days to complete a verification process, but Adyen can take up to 2 to 3 weeks. However, for direct debit, it can take anywhere from 4 to 9 months. Lastly, is our personal top pick; choosing a payments processor means instant set-up and processing! There really is no better choice for your business.
Time for some serious money talk. This part is extremely important because we know your businesses budget and revenue is one of the most important things! How much it costs may he one of the biggest factors in your decision. Wouldn’t it be a miracle if there was such thing as free money processing? Oh wait—there is!
Choosing to process your recurring payments through a payments service provider can require a lot of money initially. For credit cards it is free, however, don’t get too excited just yet. Direct Debit can cost anywhere from 2,495 pounds plus! This is because when you use direct debit management software, it will require a significant investment such as 19 thousand pounds for the provider Bottomline and Fundtech for 2,595 pounds. In addition to the cost of needing the required software, you will need to make sure your staff is sufficiently trained, which indeed requires more investment.
Free, free, and free! But seriously, for both credit cards and direct debit payments, you won’t have to pay a dime or worry about any prior investments.
A tip from the pros: Direct Debit is the cheapest option, where you will get the lowest transaction fees with a bureau or bank, however, it does come with significant hidden costs.
Before you learn the different payment churns per each payment processor, it’s important to know what a payment churn is. A churn refers to a number of payments, which were lost each month through failed payments. For example, recurring payments with a churn rate of 5 percent means losing about 50 out of 1000 customers every month.
Choosing a payments service provider may not be the best choice in terms of failure rates. For credit cards, the failure rate is between 5% and 10%, and the direct debit failure rate is 2% to 3%. Although a failure rate of 2% isn’t the worst, in fact, there is a better option with a much lower failure rate. When choosing a payment processor, you are looking at a 5% to 10% credit card failure rate, and a 0.5% direct debit failure rate. Having a failure rate below 1% is widely beneficial to any business, especially start-up businesses. With all that being said, a payment processor is clearly your best choice for losing less money during recurring payments. You will have less money lost every month through fewer failed payments.
Customer experience solely depends on each provider, especially in terms of contact options available. Although we can’t speak for every payment processor, most providers offer phone, email and more. It’s important when choosing what is best for your business to choose a provider with superior contact options, prompt responsiveness, and responsible resolutions.
While most payment gateways offer customer support through a web form, phone, and email, some will offer additional options. A payments service provider usually offers only phone and email, therefore only delivering half the amount of customer experience your business needs. When dealing with money, which is the foundation of your business, you want to have the best and most convenient customer service available at your most available times.
Now we have the essentials squared away, it’s time to consider payment timings, which are key to deciding which payment service is the best for your business.
If you choose to do your payment processing yourself, by managing your business through a bank, most payments can take anywhere between 3 to 10 working days. When it comes to payments services and payment processors, your payment timings will vary by each individual provider. However, for direct debit processing, you will be waiting about 4 to 6 working days. In fact, when considering the many benefits a payment processor provides, waiting five to six days for processing is worth it.
If you own a business you probably find yourself spending too many resources and too much time chasing payments. It’s important for a business to receive help from a qualified payment processor especially when you are collecting recurring payments and from repeat customers. You will be able to have your payments managed and filtered easily and thoroughly while losing less money from failed payments. Understanding each of these aspects is required to make a smart decision for your businesses recurring payments. For more information and if your business needs easy to collect and manageable payments, set up recurring payments today with Debit Direct.